ECOWAS single currency impossible without Nigeria, says UNECA boss

The United Nations Economic Commission for Africa (ECA) has said that the economic performance of Nigeria remains crucial in realising the dream of a single currency in the West African region.

Mr. Dimitri Sanga, Director of the Sub-Regional Office for West Africa of the United Nations Economic Commission for Africa (SRO/WA-ECA) made this disclosure on the sidelines of the meeting to establish a network of economic journalists for West Africa, in Dakar, Senegal.

Sanga noted that Nigeria constitutes about 75% of the GDP of the West African sub region, with a population of 180 million, and would play a significant role in facilitating the process of achieving a single currency for the sub-region.

According to him, “people are saying why don’t we move directly to the currency of the most powerful country in the zone. Because as you know the currency is determined by the forces between the exports and imports that you have.”

He then noted that “when you look at the economy of Nigeria, Nigeria represents more than 75 per cent of the GDP of West Africa. That means that whatever the situation, if we come up with the common currency, the macroeconomic stability of Nigeria is key to the common currency goal of the ECOWAS.”

He said that the ECA as the “Think Tank” of Africa has been tasked to find out what it would take to accelerate the Economic Community of West African Countries (ECOWAS) single currency dream. He said the report will be released soon.

“Our study will advise Head of States of ECOWAS on how to go about this. Our study is saying these bottlenecks can be addressed depending on the political willingness of the Heads of States.

“Some of the bottlenecks right now have to do with the fact that the CFA zones, are very comfortable with the single currency trading among themselves, pegged to the Euro making it easy to trade with Europe.”

Sanga said that right now the region had agreed that some basic macroeconomic criteria would have to be met before the countries make the big leaps towards collapsing their economies.

“In our studies, we went as far as looking at what Europe went through and how they came out with the Euro together. Actually they did not start by respecting all convergence criteria before coming up with the common currency.”

The UNECA Director also advised African countries to learn from Nigeria and rebase their GDPs so they could have a clearer picture of the sectors contributing to the growth of their economies.

The Eco (the proposed common currency) he said, is planned to be introduced in the framework of the ECOWAS. For the Eco to be implemented, 10 convergence criteria set out by the West African Monetary Institute must be met. The four primary criteria to be achieved by each member country are a single-digit inflation rate at the end of each year, a fiscal deficit of no more than 4 per cent of the GDP.

“The goal is to merge the new currency with the West African CFA franc, used by the French-speaking members of ECOWAS since 1945 at a later date. This will create a common currency for much of West Africa,” Sanga stressed.